The Task Force on Structural Changes in Budget and Tax Policy is expected to release its ideas in a final report to legislators in September to fix Louisiana’s budget.
Rep. Gene Reynolds, District 10, says he did not attend Monday’s meeting, but said the group is tasked with finding ideas on how to find long-term fixes to the budget so legislators don’t have to keep going back year after year to try to plug holes.
All of the needs, such as funding K-12 and higher education, healthcare and infrastructure, have not changed, he said.
“The problem is how do we address those needs and not raise taxes permanently,” he said. “Tax reform is getting rid of all the exemptions, lower the rates and everybody pays the same. That’s tax reform. You’re going to have some of those tax ideas that will come out on both sides.”
Once the report is submitted to the legislature, it will be up to the legislators on which ideas can pass and which cannot pass.
“Some things we can vote on and pass, but some things, the voters have to vote on to pass,” he said. “The needs are not complicated. It’s complicated in how you address those needs on a yearly basis. All of these ideas will be for long-term fixes, because if we do nothing, and the sales taxes begin to roll off next year, in 2018, the immediate budget deficit will be over $2 billion. There would be massive cuts to everything.”
He says some tough votes are coming on both sides. For example, one of the thoughts from Republicans is to do away with the inventory tax, he said. He says it sounds great in theory, and explained how the inventory tax is paid.
Businesses pay inventory taxes to the sheriff’s office, and the money they pay stays with the locals.
“A few years ago, to lessen the blow of the inventory tax, they told companies, ‘Ok, if you pay to the locals, the locals can keep it. So send in the forms to us and we will repay you from the state coffers to the local businesses dollar for dollar,’” he said. “So the state is on the hook, the locals get the money, but the state pays for it.”
At the time, the state was only paying out $35-45 million, but it has since ballooned to $500 million, Reynolds said. If the inventory tax is repealed, that is a $500 million hit to all the local governments in the state.
“That means sheriff’s offices, school boards, police juries,” he said. “That’s one of the issues that people may or may not have a hard time voting for. In a nutshell, there’s going to be some hard votes and some decisions have to be made on whether we want to keep doing what we’ve been doing, or do we want a long-term fix.
“My advice to the people is don’t get upset until we finalize a package of bills that we think has a chance to pass and can make a difference,” he continued. “Then you can scrutinize.”
The task force covered an array of items on its agenda, including spending, tax alternatives, corporate income and franchise taxes as well as other topics. They met again Wednesday morning to continue discussion at the Louisiana Department of Revenue in the LaSalle Building in Baton Rouge.